Powerball Lottery Winnings: Sharing With Your Estranged Spouse

The recent hype over the Powerball lottery with a payout of $1.5 billion dollars was unprecedented.  The jackpot reached the highest dollar amount in Powerball history and caused many to ponder the prospect of winning.  Those who ponder winning are of all walks of life—wealthy, poor, optimists, pessimists, altruists, gamblers, young, old, married, separated, and divorced.  Now imagine that you are married but separated and you win the Powerball lottery.  Are you required to share your hard-earned winnings with your estranged spouse under Maryland law?

Yes.  In Maryland, marital property is property acquired during the marriage.  Although there are limited exceptions to this general rule, none of them include winning the lottery.  Furthermore, marital property is valued as of the date of the divorce—so holding onto the ticket until after the divorce is finalized will not change the analysis. Ultimately, this property will be subject to an equitable distribution.  Equitable, however, does not necessarily mean equal.  So, the division of your lottery winnings may be 50/50 or it may be some other distribution. 

There is hope, however, that you can keep all of your winnings to use at your discretion (minus taxes, of course).  In a divorce case, the court will consider a number of factors to determine an equitable distribution of the lottery winnings.  The court may agree with you that it would be inequitable or unfair to share under the circumstances.  Although a court may not require an outright equal distribution, your newfound wealth may be considered for a number of other decisions.  For instance, the court might consider your newly acquired wealth in granting a monetary award or any award of alimony.

Finally, if you are the estranged spouse of the winner, congratulations, you have won the lottery without buying a ticket!

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.